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Result Update: ENIL• ENIL: De-growth in revenues reflects the challenges of a deteriorated macro for advertising revenues; high fixed cost base in OoH does not help. Maintain REDUCE.• Q3FY09 results reflect the impact of a slowing macro environment on advertising spends; radio revenues are down 12% YoY while consolidated revenues drop 19% YoY. OoH subsidiary pares profit from radio business translating into losses at the consolidated level.• Quarterly revenue growth trends validate our cautious outlook towards advertising spend trends. A visible slowdown in advertising spends towards alternate media platforms like radio, outdoor (part of ENIL’s bouquet) likely to hurt over the challenging medium term.• OoH to remain a drag as the cost base rises with new investments while revenues are yet to gain traction; a weak macro does not help. Incremental margin gains will be difficult given the challenging macro and the high fixed costs that will likely push back new business break-evens.• Adj…

Revenues of the company for the current quarter were ahead of expectations, registering 27% growth in Q1FY09.Operating margins for Q1FY09 stood at 9.4%,slightly lower than estimates. This was impacted by higher raw material prices.Net profit for the current quarter registered a marginal increase of 3% due to steep increase in the interest charges as well as lower operating margins.

At current price of Rs 130, NCC is trading at 16.9x and 13.8x on P/E multiples and 7.4x and 6.4x on EV/EBITDA multiples on FY09 and FY10 estimates respectively. Adjusted with BOT valuations, it is trading at 10.5x and 8.6x on P/E multiples on FY09 and FY10 estimates.

To factor in the increasing interest rate scenario and lower than expected growth in profitability going forward, we lower our target valuation multiples for the company going forward. Investors can buy on declines with a price target of Rs 190, the targed based on sum-of-the-parts methodology based on FY1…